Healthcare Newsletter

Problems in agreeing to a percentage deal

Provided by: Jennifer Kirschenbaum, Esq.

May 22, 2014

It's contract season as we all know for residents and fellows entering the workforce and a standard question we receive is what are the problems associated in agreeing to a percentage deal for compensation. Two major issues with accepting percentage compensation are:

1. How is the percentage defined - are you receiving a percentage of gross or net collections or billables? If net, what expenses are being deducted? If collections, which is more likely, what is the historical collection rate for the employer. The definition, what you are receiving a percentage of, IS your compensation. Make sure you understand what you are entitled to a percentage of.

2. Once you have agreed on your percentage compensation, and you have earned a right to payment, make sure you have the right to confirm you are being paid correctly - carve yourself out a right to audit your employer's records, even if limited to your billables and collections. Without this right how will you know whether you are being paid properly?

The above listed considerations are not an exhaustive list when it comes to percentage compensation, but they are important ones - understand your compensation and have the right to confirm your numbers!